Conzzeta: Surge in revenue and improved profitability - strengthened position in growth markets

Annual results 2017
Surge in revenue and improved profitability - strengthened position in growth markets

• Net revenue +22.5% (comparable¹ +14.3%) to CHF 1,482.8 million
• EBIT +46.0% to CHF 123.2 million, EBIT margin 8.2%
• Adjusted EBIT² +35.6%, adjusted EBIT margin 7.6%
• Adjusted return on net operating assets (RONOA) 19.5%
• Group result +52.4% to CHF 97.4 million
• Proposed dividend for class A shares CHF 16.00, +45.5%

¹ At constant exchange rates and adjusted for changes in the scope of consolidation.
² Excluding CHF 8.8 million capital gain from the sale of the 51% stake in the US joint venture in the FoamPartner business unit on July 1, 2017.
³ From 2017 onwards, Other operating income is shown separately and is no longer recorded under Net revenue and Total revenue. The figures for 2016 have been adjusted accordingly.
⁴ Free cash flow excluding changes in securities and deposits with a term of more than 90 days, and net of acquisitions and divestments of business activities.

Zurich, March 20, 2018 - The Conzzeta Group achieved revenue growth of 22.5% to
CHF 1,482.8 million in 2017. The operating result (EBIT) increased by 46.0% to CHF 123.2 million. This includes a one-time gain of CHF 8.8 million from the sale of the 51% stake in the US joint venture in the FoamPartner business unit on July 1, 2017. Adjusted for this special effect, the return on net operating assets (RONOA) was 19.5% compared with 15.6% in the previous year.

The robust sales development seen in the second half of 2016 and the first half of 2017 was exceeded once again in the second half of 2017 in a favorable business environment for capital goods. Progress was made in the implementation of strategic and operational initiatives. In 2017, the Group realized revenue growth of 44.1% in Asia, or 23.7% on a comparable basis. While net revenue in Europe also recorded a double-digit increase, business in the Americas developed underproportionally. The takeover of Otto Bock Kunststoff as of September 1, 2017 within the FoamPartner business unit marked an important development step for Conzzeta. A milestone had already been achieved in the previous year with the acquisition of a 51% stake in the Chinese DNE Laser in the Bystronic business unit.

According to Michael Willome, Conzzeta Group CEO: "We are very pleased with the annual results for 2017, and we are also making good progress in implementing our priorities. In Asia, in particular, we managed to nearly double revenue over the past 24 months and thus to significantly expand the share of total Group revenue from under 20% to 27%. Consequently, Conzzeta now has much stronger footprint in the world's most important growth region, and we will continue to drive internationalization forward. Despite improved profitability, we need to continue our efforts in order to achieve our target mid-term EBIT margin range of 8% to 10% without special effects."

The Group generated free operating cash flow of CHF 65.4 million in 2017, against CHF 76.0 million in the previous year. Investments in property, plant and equipment and intangible assets, primarily in the modernization of production facilities in the Bystronic and FoamPartner business units, amounted to CHF 37.3 million compared with CHF 24.7 million in 2016.

Earnings per share were CHF 40.47 for each class A registered share and CHF 8.09 for each class B registered share, after CHF 29.10 and CHF 5.82, respectively, in the previous year. At the Annual General Meeting on April 24, 2018, the Board of Directors will propose a dividend of CHF 16.00 for each class A registered share and a dividend of CHF 3.20 for each class B registered share, a 45.5% increase on the previous year.

Trends and outlook: Cash, cash equivalents and securities stood at CHF 399.1 million at the end of 2017, and the equity ratio was 68.2%. Thus, even after the acquisitions and investments made over the course of 2017, Conzzeta has a solid balance sheet that will help to sustainably develop its business and actively shape its portfolio over the mid-term. The focus for acquisitions remains on the Sheet Metal Processing and Chemical Specialties segments. In the Bystronic business unit, larger infrastructure investments are planned over the next two years in North America and at the the Swiss production site. In 2018, the FoamPartner business unit will focus on working with Otto Bock Kunststoff to launch the expanded range of products and services on the market. Thanks to the larger presence in Asia and the US, opportunities arise for additional growth and efficiency gains. The Mammut Sports Group business unit during the 2017 transitional year progressed according to schedule with the implementation of its five-year strategic plan commenced in 2016. Further improvements in revenue and earnings contributions are expected in 2018, although this unit will fall short of the Group's mid-term targets. The benchmark is the Group's ambition to achieve revenue growth of more than 5%, an EBIT margin of 8% to 10%, and a return on net operating assets of more than 15%.

The robust economic development and the generally favorable investment climate have continued into the first quarter of 2018. In this environment and following the very dynamic revenue expansion of 2017, Conzzeta anticipates high single-digit revenue growth, a higher operating result and a further improved EBIT margin in 2018.

¹ From 2017 onwards, Other operating income is shown separately and is no longer recorded under Net revenue and Total revenue; the figures for 2016 have been adjusted accordingly.

The Sheet Metal Processing segment (Bystronic) generated net revenue of CHF 856.1 million in 2017, a year-on-year rise of 31.5% (previous year: CHF 650.9 million). On a comparable basis, revenue increased by 23.7%. The operating result amounted to CHF 98.0 million (CHF 63.0 million) with an EBIT margin of 11.2% (9.7%). All regions recorded solid double-digit growth rates. Although competition and pricing pressure remained fierce, both the entry-level products and the newly introduced higher performance machinery and automation solutions met with strong demand. Bystronic continues its high rate of innovation. In June 2017, over 1,000 customers from all over the world attended the "Competence Days" held at the Niederönz site, where various products innovations were presented, such as a laser cutting system for large-format sheet metal, expanded functions for cutting tubes, and additional mobile and automated sheet metal bending capabilities. Various software solutions were also introduced, including an integrated digital solution for managing production from order intake through to the finished product. Bystronic continued to generate more than half its sales with products introduced less than three years ago.

The Sporting Goods segment (Mammut Sports Group) generated net revenue of CHF 228.6 million in 2017, down 1.9% from the previous year (CHF 232.9 million). At stable exchange rates, revenue declined by 1.7%. The operating result amounted to CHF 0.1 million (CHF 1.2million) with an EBIT margin of 0.1% (0.5%). In the reporting year, low-margin revenues and liquidation sales in the amount of CHF 9.5 million were eliminated, and the share of revenue from sales channels with higher margins increased. Additional costs were partially offset by an improvement in sales quality as part of the five-year strategic plan launched in 2016, as well as continued spending discipline. In keeping with the strategic plan, these additional costs were incurred in order to strengthen critical capabilities, particularly in the areas of digitalization, retail and design, and in the recruitment in the international markets. For this purpose, over 30 additional full-time positions were created in 2017. Product innovations such as the next generation of the "Eiger Extreme" flagship apparel collection and the newest version of the Barryvox avalanche transceiver were well received.

The Chemical Specialties segment (FoamPartner and Schmid Rhyner) generated net revenue of
CHF 279.2 million in 2017, a year-on-year rise of 27.1% (previous year: CHF 219.7 million). On a comparable basis, growth was 4.9%. The figures factor in the changes in the scope of consolidation affecting the FoamPartner business unit, namely the inclusion of Otto Bock Kunststoff, which was acquired as of September 1, 2017, and the removal of the 51% stake in the US joint venture, which was sold effective July 1, 2017. The operating result amounted to CHF 24.8 million (CHF 23.1 million) with an EBIT margin of 8.8% (10.5%). It includes a one-time gain of CHF 8.8 million from the sale of the joint venture. As expected, the operating EBIT margin reported in the previous year could not be maintained due to a significant increase in the cost of raw materials. Only some of the increased costs could be passed on to the market by way of price increases, and only subject to a time lag. Net revenue was higher in all product segments and in the regions of Europe and Asia, while revenue was lower in the Americas, partially due to the aforementioned sale in the FoamPartner business unit.

The Glass Processing segment (Bystronic glass) generated net revenue of CHF 119.3 million in 2017, a year-on-year rise of 11.6% (previous year: CHF 106.9 million). At stable exchange rates, revenue increased by 11.8%. The operating result amounted to CHF 6.3 million (CHF 1.0 million) with an EBIT margin of 5.4% (0.9%). In a generally favorable market environment, business picked up in both the architectural and automotive glass markets in the second half of the year, with results notably exceeding the results reported in the first half of the year. Thanks to larger orders, revenue in both the automotive glass market and in Europe and Asia posted double-digit growth rates on an annual basis, but it was not possible to maintain revenue in the Americas. The cost-reduction measures implemented in the first half of the year, particularly at the Neuhausen location in Germany, as well as the initiated process optimization had a positive impact on earnings. Organizational structures have been further strengthened, particularly in China, in order to broaden growth opportunities geographically.

The Annual Report 2017 and the results presentation will be available at www.conzzeta.com.

Inquiries: Michael Stäheli, Head Investor Relations & Corporate Communications; +41 44 468 24 49, media@conzzeta.com.

About Conzzeta
Conzzeta is a broadly diversified Swiss group of companies. It stands for innovation, reliability and a long-term perspective. Conzzeta strives for leading positions in its target markets, above-average growth and long-term value creation. More than 4,700 employees at over 60 locations worldwide are dedicated to offering customers innovative solutions in Sheet Metal Processing, Sporting Goods, Foam Materials, Graphic Coatings and Glass Processing.
Conzzeta AG is listed on the SIX Swiss Exchange (SIX:CON).